Crosstalk between chromatin and Shavenbaby defines transcriptional output along the Drosophila intestinal stem cell lineage

The transcription factor Shavenbaby (Svb), the only member of the OvoL family in <i>Drosophila</i>, controls the fate of various epithelial embryonic cells and adult stem cells. Post-translational modification of Svb produces two protein isoforms, Svb-ACT and Svb-REP, which promote adult intestinal stem cell renewal or differentiation, respectively. To define Svb mode of action, we used engineered cell lines and develop an unbiased method to identify Svb target genes across different contexts. Within a given cell type, Svb-ACT and Svb-REP antagonistically regulate the expression of a set of target genes, binding specific enhancers whose accessibility is constrained by chromatin landscape. Reciprocally, Svb-REP can influence local chromatin marks of active enhancers to help repressing target genes. Along the intestinal lineage, the set of Svb target genes progressively changes, together with chromatin accessibility. We propose that Svb-ACT-to-REP transition promotes enterocyte differentiation of intestinal stem cells through direct gene regulation and chromatin remodeling.